Navigating Income Tax in FY 2024-25: A Guide for Salaried Individuals

Navigating Income Tax in FY 2024-25: A Guide for Salaried Individuals

With the new financial year commencing on April 1, 2024, here are 7 key income tax points salaried individuals in India should remember:

1. Choosing Your Tax Regime

• Important Decision: Employees must decide between the old and new tax regimes for Tax Deducted at Source (TDS) on their salary. ([h2]TDS Explained[/h2] - TDS is a portion of your income tax deducted by your employer and deposited with the government).

• Default Regime: Failure to communicate your choice to your employer will result in tax deduction based on the new regime by default.

2. Basic Exemption Limits

• Know Your Limit: The basic exemption limit, the income amount exempt from tax, differs between the regimes.

• New Regime: Currently, under the new regime, income up to Rs 3 lakh is tax-free for all individuals.

• Old Regime: The limit in the old regime varies based on your age (refer to a tax professional for details).

3. Understanding Tax Slabs

Knowing your tax slab is crucial as it determines the tax rate applicable to your income. Here's a breakdown for both regimes:

New Regime

• Up to Rs 3,00,000: 0%

• Rs 3,00,001 to Rs 6,00,000: 5%

• Rs 6,00,001 to Rs 9,00,000: 10%

• Rs 9,00,001 to Rs 12,00,000: 15%

• Rs 12,00,001 to Rs 15,00,000: 20%

• Above Rs 15,00,000: 30%

Old Regime

• Up to Rs 2,50,000: 0%

• Rs 2,50,001 to Rs 5,00,000: 5%

• Rs 5,00,001 to Rs 10,00,000: 20%

• Above Rs 10,00,000: 30%

4. Deductions and Exemptions

• Maximise Savings: Both regimes offer deductions and exemptions that can reduce your taxable income.

• Old Regime: Offers a wider range of deductions like Section 80C (investments), 80D (medical expenses), home loan interest, etc.

• New Regime: Provides a standard deduction of Rs 50,000 and a deduction for NPS contributions.

5. Timely ITR Filing

• Old Regime Option: To choose the old tax regime while filing your income tax return (ITR), it must be filed before the July 31 deadline. Opting for the old regime later is not possible.

6. Reduced Surcharge for High Earners (New Regime)

• Benefit for High Earners: High-income earners choosing the new regime will benefit from a reduced surcharge rate of 25% for incomes exceeding Rs 5 crore. The old regime has a higher surcharge rate of 37%.

7. ITR Forms Available

• Get Ready to File: ITR forms (ITR-1, ITR-2, ITR-4) for FY 2023-24 (AY 2024-25) are now available on the e-filing income tax portal. 

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